JRPG is a genre. Genres are currently not based upon geographical location of physical coding. Game genre sorting is determined by certain factors related to a games content, not related to the physical locations of their developers.

Demon Souls is not a JRPG by genre. It doesn't fit into any of the genre staples by a long shot. It is nothing like any other game in the JRPG genre, and it is very much like every other game in the WRPG genre.

Explain you logic though. Do JRPG games need to be made by Japanese people, or could they just be made physically inside the nation of Japan?

You are trying to define the JRPG lable as a reference to a place, and not a reference to a genre. A genre is defined by a set of common factors that most games share. RPG is a genre. Subgenres are defined by an even more specific set of features that certain games within that genre share. WRPG, SRPG, JRPG, and MMORPG are subgenres. Demon Souls isn't a JRPG any more than it is a MMORPG. It's a WRPG, by genre classification, if it's anything, but it certainly doesn't come close too being a JRPG, traditionally a sub-genre based on character and story development which drives the game forward. I also have trouble classifying another one of my favorite RPGs are a JRPG, Vagrant Story. I do believe that SRPGs are JRPGs as well. I believe that SRPG is a subgenre of JRPG, and not a subgenre of RPG.

Anyway, that's just my opinion. To each his own.

Tales of Vesperia for me. Now playing it on PS3 before FF 13 in a couple of weeks.

between ToV and VC

EDIT: Can persona 4 count? I know it's not on these "next gen systems" but it came out during the period of most games people listed so....PERSONA 4 FTW!!!!

Tales of Vesperia(PS3 Version), played it nonstop until I beat it. :P

As I said, that's why I don't like to define genres for what the current definition is.

Alas, you cannot also claim that Demon's Souls is more WRPG than JRPG, due to it missing some crucial factor in all WRPG's. Skill development trees and free form NPC interaction
In fact, in terms of gameplay, it feels more like a free form combat action style similar to the feel of, let's say, Kingdom Hearts. Both are open-world, both allow you for free form battle, both allow for character customization and so on. Granted, the way they do it is very different, as for KH focuses on a fixed character development, Demon's Souls gives you full control of the way you want to develop your character.

You raisd a good point with Vagrant Story, but that's why I also used the examples of Parasite Eve and Terranigma. I could have used others, because there is in fact some JRPG games that don't fit into the "molds" that we commonly associate to JRPG's.

I ask you now this, if a western company made a game similar to Final Fantasy or Dragon Quest, would people call it a JRPG? I don't think that would happen.

My point is, people stick to definitions that aren't actually the true portrayers of a single genre. Even if they are the most common characteristics of the majority of the games in the same genre, when a game comes out, overlapping those characteristics, then we are left with it lost in the midst of definition.

Tales of Vesperia

Valkyria Chronicles.

Either Lost Odyssey or obviously Star Ocean TLH

Ah... eh...

If SRPGs count... I guess VC.

If not... uh... I guess Tales of Vesperia. Nothing too engaging yet.

Eternal Sonata and Tales of Symphonia (the GC version) :D